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Why Are Institutions Buying Ethereum Before the December Fusaka Upgrade?
Ethereum is showing strong signs of life. After weeks of downward pressure, the price jumped from $2,680 on November 21 to over $3,000. This recovery suggests the market trend is shifting. Experts believe holding this price level could confirm a broader reversal. The asset remains nearly 40% below its August peak, but the recent momentum is encouraging for traders.
Supply Shock: Why Fewer Coins Mean Higher Prices
A massive reduction in available tokens is driving this recovery. Data from CryptoQuant confirms that Ethereum reserves on exchanges dropped significantly. Reserves fell from 20.9 million ETH in July to just 16.8 million today. This is a multi-year low.
When exchanges hold fewer tokens, immediate selling pressure drops. This decline indicates investors are moving assets to long-term storage. Holders are transferring ETH to cold wallets, staking protocols, and DeFi platforms to earn yields rather than selling. This liquidity crunch means even moderate buying pressure can push prices up quickly.
The Fusaka Catalyst: Network Improvements Drive Sentiment
Market optimism is also rising ahead of the Fusaka upgrade. This network update is scheduled for December 3 and aims to improve scalability. Fusaka is expected to be the most significant change since “The Merge.”
The upgrade focuses on data availability for rollups. This technical fix addresses network congestion and high costs. Community discussions are active, and positive sentiment is growing. Traders often buy assets before major technological milestones, and Fusaka appears to be fueling this accumulation.
Institutional Investors Return to the Fold
Smart money is flowing back into Ethereum. Nine U.S. spot ETH ETFs reported $236 million in net inflows this week. This marks a sharp turnaround after three weeks of outflows totaling $1.7 billion.
Institutions are buying significant amounts of ETH. Many of these large players prefer staking assets over keeping them liquid on exchanges. This institutional confidence signals a shift in long-term sentiment. When combined with the supply crunch, this buying pressure creates a strong foundation for price growth.
Technical Outlook: Key Levels to Watch
Ethereum recently broke out of a “falling wedge” pattern. This technical formation often precedes a bullish reversal. The asset now faces resistance at the 200-day moving average of $3,096.
If the price breaks above $3,096, Ethereum could target $3,600 next. However, traders should remain cautious. A drop back below $3,000 could see prices retest support at $2,750. The combination of low supply, the upcoming Fusaka upgrade, and renewed institutional interest suggests the bulls are currently in control.